The World Bank on Thursday said it would extend $1 billion (around Rs 6,700 crore) to support solar power generation programmes in India. The amount could come in handy for the country aiming to generate solar power of 100 gigawatt by 2022 as part of its initiatives to reduce greenhouse gas emissions.
The funding pact was signed between visiting World Bank Group president Jim Yong Kim and power minister Piyush Goyal in New Delhi. “We discussed renewable energy, especially rooftop solar projects.
We also discussed innovative financing models by which we can boost the renewable energy sector,” Goyal said.
The multilateral agency has already approved $625-million loan that will support the government’s grid connected rooftop solar programme by financing the installation of solar panels on rooftops across the country.
On Thursday, World Bank also signed a pact with the International Solar Alliance (ISA), consisting of 121 countries led by India, to collaborate on increasing solar energy use around the world, with the aim to mobilise $1 trillion in investments by 2030.
India has unveiled a bold initiative to derive at least 40% of its energy needs from renewable sources by 2030. This includes plans for the development of 100GW of solar power by 2022, an extremely ambitious target considering the world’s installed solar power capacity in 2014 was 181GW.
Besides World Bank, India is tapping other long-term sources of funding such as the Asian development Bank, the New Development Bank and the soon-to-be-operational Asian Infrastructure Investment Bank.
The prospect of solar energy for the country which has taken multilateral commitment to reduce its carbon footprint appeared brighter as the tariff discovered under competitive bidding by state-run NTPC plunged to below R5 per unit late last year.
The United States-based SunEdison bagged the bid at Rs 4.63 per unit for 500 MW to be installed in Andhra Pradesh. This meant that solar power had achieved grid parity — the cost of solar power being on a par with thermal power — an outcome that was estimated to materialise much later, in 2018. In bids in January this year, a Finnish company went further, quoting Rs 4.34 per unit in Rajasthan.
While analysts say further reduction of tariffs from this level was unlikely, lenders are reluctant to finance projects with sub-Rs 5 per unit tariff as the margin for such projects would likely be very thin.
The World Bank-supported projects in the works include solar rooftop technology, infrastructure for solar parks, bringing innovative solar and hybrid technologies to market, and transmission lines for solar-rich states. “The development of a $200-million Shared Infrastructure for Solar Parks Project under a public-private partnership model is also under preparation,” the World Bank said in a statement.